Compliance Compilation

Transcription

1 Compliance Compilation For January through June of 2015

2 TABLE OF CONTENTS January 3 Proposed Rules Issued Regarding Wraparound Coverage January 9, ACA Impact on Expatriate Plans Eased January 9, Proposed Regulations on Summary of Benefits and Coverage January 23, Retroactive 2014 Qualified Transit/ Vanpooling Exclusion Adjustment January 29, 2015 February Federal Poverty Line Amounts Issued February 3, Medicare Part D: Reminder to Notify CMS February 18, Final Forms Released for Individual and Employer Mandate Reporting February 19, 2015 March 12 Anthem Cyber Attack Frequently Asked Questions March 10, Final FMLA Rules Regarding Same-Sex Spouses March 11, CMS Announces Special Enrollment Period in Federal Exchanges March 12, Guidance Issued Regarding Supplemental Excepted Benefits March 19, Relief for Small Employers Reimbursing Individual Policies March 19, Should Plan Years be Changed to Delay Compliance with ACA Provisions? March 25, 2015 April Cost-Sharing Limits, Reinsurance Fee, and Other Changes Related to the Exchange April 9, Cadillac Tax: Part 1 Preliminary Guidance April 16, Reinsurance Fee Overpayment Refund Request Deadline is April 30 April 29, 2015 May HSA Limits May 8, Cadillac Tax: Part 2 Preliminary Guidance May 19, 2015 June 29 FAQs Further Clarify New Embedded Out-of-Pocket Requirement June 1, Guidance Issued on Coverage for Preventive Items and Services June 9, Protections for LGBT Workers June 9, PCOR Fee Filing Reminder for Self-Insured Plans June 11, Form 5500 Filing Reminder June 15, Supreme Court Upholds Subsidies June 25, IRS Releases Draft 2015 Forms June 26, 2015 Appendix 35 Employer Reporting Guide for Large Employers April 23, 2015 This document is designed to highlight various employee benefit matters of general interest to our readers. It is not intended to interpret laws or regulations, or to address specific client situations. You should not act or rely on any information contained herein without seeking the advice of an attorney or tax professional My Benefit Advisor. All Rights Reserved. My Benefit Advisor California Insurance #0G33244

3 Published on January 9, 2015 Proposed Rules Issued Regarding Wraparound Coverage On December 19, 2014, the Departments of Labor, the Internal Revenue Service and Health and Human Services issued a proposed rule that provides helpful guidance with respect to certain wraparound programs. The concept of the wraparound coverage excepted benefit was first introduced in a proposed rule issued December 24, According to the DOL, these proposed rules would give employees who otherwise may not be able to get generous employerbased benefits access to high level benefits and would give businesses, including small businesses, new flexibility to meet the unique needs of their workforce. Background As background, an employer cannot offer employees cash to reimburse the purchase of an individual policy, whether the employer treats the money as pre-tax or post-tax to the employee. Such arrangements are subject to the market reform provisions of the Affordable Care Act, including prohibition on annual limits and the requirement to provide certain preventive services without cost sharing with which it cannot comply. Such an arrangement may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee). Limited Wraparound Coverage Limited wraparound coverage is limited benefits provided through a group health plan that wrap around either eligible individual health insurance or coverage under a Multi-State Plan. Eligible individual health insurance is individual health insurance coverage that is not a grandfathered health plan, not a transitional individual health insurance market plan, and does not consist solely of excepted benefits (which include certain dental and vision plans, health FSAs, and HRAs). To qualify as excepted benefits, the limited benefits must meet all of the following requirements: 1. Cover additional benefits. The limited wraparound coverage provides meaningful benefits beyond coverage of cost sharing under either the eligible individual health insurance or Multi- State Plan coverage. The wraparound coverage must not provide benefits only under a coordination-of-benefits provision and must not merely be an accountbased reimbursement arrangement. This document is designed to highlight various employee benefit matters of general interest to our readers. It is not intended to interpret laws or regulations, or to address specific client situations. You should not act or rely on any information contained herein without seeking the advice of an attorney or tax professional. 2. Limited in amount. The annual cost of coverage per employee (and any covered dependents) under the limited wraparound coverage does not exceed the indexed maximum annual salary reduction contributions toward health FSAs ($2,550 for 2015). For this purpose, the cost of coverage includes both employer and employee contributions towards coverage and is determined in the same manner as the applicable premium is calculated under a COBRA continuation provision. 3. No discrimination. The limited wraparound coverage (a) does not impose any preexisting condition exclusion; (b) does not discriminate against individuals in eligibility, benefits or premiums based on any health factor of an individual; and (c) does not, nor does any other group health plan coverage offered by the plan sponsor, discriminate in favor of highly compensated individuals. 4. Plan eligibility. Individuals eligible for the wraparound coverage cannot be enrolled in excepted benefit coverage that is a health FSA. 5. Reporting. The plan sponsor of a group health plan offering wraparound coverage must report to HHS, in a form and manner specified in guidance, information HHS reasonably requires. JANUARY 3

4 JANAURY When Can Limited Wraparound Coverage be Offered? The provisions apply to limited wraparound coverage that is first offered no later than December 31, 2017 and that ends on the later of: The date that is three years after the date wraparound coverage is first offered; or Other group health plan coverage, not limited to excepted benefits, is offered to the individuals eligible for the wraparound coverage. Only individuals eligible for the other group health plan coverage are eligible for the wraparound coverage. Limited wraparound coverage offered in conjunction with Multi-State Plan coverage must satisfy all of the following conditions: The date on which the last collective bargaining agreement relating to the plan terminates after the date wraparound coverage is first offered (determined without regard to any extension agreed to after the date wraparound coverage is first offered). Under What Circumstances can Limited Wraparound Coverage be Offered? Wraparound benefits offered in conjunction with eligible individual health insurance must satisfy all of the following requirements: Eligibility for the wraparound coverage is limited to employees who are not full-time employees ( FTEs ) and their dependents, including retirees and their dependents. For each year for which wraparound coverage is offered, the employer that is the sponsor of the plan offering wraparound coverage, or the employer participating in a plan offering wraparound coverage, offers to its FTEs coverage that is substantially similar to coverage that the employer would need to offer to its FTEs in order not to be subject to a potential assessable payment under the employer penalty, if such provisions were applicable; provides minimum value; and is reasonably expected to be affordable (applying the safe harbor rules). If a plan or issuer providing limited wraparound coverage takes reasonable steps to ensure that employers disclose to the plan or issuer necessary information regarding their coverage offered and affordability information, the plan or issuer is permitted to rely on reasonable representations by employers regarding this information, unless the plan or issuer has specific knowledge to the contrary. The limited wraparound coverage is specifically designed and approved by the Office of Personnel Management ( OPM ) to provide benefits in conjunction with coverage under a Multi-State Plan. The employer has offered coverage in the plan year that begins in 2014 that is substantially similar to coverage that the employer would need to have offered to its FTEs in order to not be subject to an assessable payment under the employer penalty provisions, if such provisions had been applicable. In the plan year that begins in 2014, the employer has offered coverage to a substantial portion of FTEs that provided minimum value and was affordable (applying the safe harbor rules). The employer s annual aggregate contributions for both primary and wraparound coverage are substantially the same as the employer s total contributions for coverage offered to FTEs in A self-funded plan, or a health insurance issuer, offering or proposing to offer Multi-State Plan wraparound coverage reports to the OPM, in a form and manner specified in guidance, information OPM reasonably requires to determine whether the plan or issuer qualifies to offer such coverage or complies with the applicable requirements. 4

5 Published on January 9, 2015 ACA Impact on Expatriate Plans Eased On December 16, 2014, as part of the Consolidated and Further Continuing Appropriations Act, 2015, President Obama signed into law amendments to the Affordable Care Act ( ACA ) that largely exempt expatriate plans from most ACA compliance requirements. While federal regulators had allowed expatriate plans certain transition relief on an ad-hoc basis for various ACA requirements, the regulatory approach was piecemeal and temporary, while leaving many compliance issues unresolved. The new legislation significantly clarifies the ACA requirements applicable to expatriate plans. While it is too soon to expect regulatory guidance, the legislation is surprisingly detailed and is the first significant legislative change to the ACA since the law was passed in The new provisions are applicable to expatriate health plans issued or renewed after July 1, 2015, except for the health insurance fee, as noted below. Expatriate plans are defined as self-funded and fully insured plans that offer coverage to qualified expatriates and their dependents. Qualified expatriates are: (1) certain foreign employees transferred or assigned to the U.S. for a specific and temporary employment purpose or assignment, (2) individuals working outside the U.S. for at least 180 days in a 12-month period, and (3) individuals who are members of certain groups, such as students or religious missionaries. The new law: Exempts fully insured and self-funded expatriate health plans from most of the ACA s market reforms (though not the adult dependent/age 26 requirement). Deems expatriate health plans to be minimum essential coverage for expatriate employees and their dependents, regardless of where they are located in the world. Deems expatriate health plans to be minimum essential coverage under an eligible employersponsored plan for purposes of the employer mandate with respect to certain foreign employees working in the U.S. and certain U.S. expatriates working abroad, but does not exempt employers that provide or purchase these plans from other employer mandate requirements including reporting responsibilities. 5

6 JANAURY Exempts expatriate plans from the health insurance fee (after 2015) (transition rules for 2014 and 2015), the transitional reinsurance program fee, and the PCORI fee. Exempts employer-sponsored coverage owf most categories of expatriates from the excise tax on high cost employersponsored health coverage. Exempts expatriate health plans from a change in the definition of a small group, which could have prevented the sale of expatriate coverage to employers with 50 to 99 lives. Exempts insurers of expatriate health plans and expatriate health plans from the so-called administrative simplification requirements, including SBC requirements. Plan sponsors of expatriate plans should review their plan design carefully to ensure they are in compliance with certain provisions of the ACA still applicable to such plans, including employer shared responsibility and its associates reporting/disclosure rules, certain fees and adult-child age 26 mandates. Published on January 23, 2015 Proposed Regulations on Summary of Benefits and Coverage 6 On December 22, 2014, the Departments of Labor, the Internal Revenue Service and Health and Human Services issued proposed regulations and supporting documents addressing the SBC requirement. The majority of the proposed regulations incorporate the guidance previously published in numerous FAQs, but some new information is provided. Key items in the proposed regulations, if adopted, would (a) clarify when and how a plan administrator or insurer must provide an SBC, (b) shorten the length of the SBC, (c) amend the uniform glossary and (d) add a third coverage example regarding simple foot fracture with emergency room visit. If finalized, the new requirements would be effective for plan years and open enrollment periods beginning on or after September 1, Below you will find pertinent information found in the proposed regulations. Types of Plans to which SBCs Apply The proposed regulations confirm that SBCs are not required for expatriate health plans, Medicare Advantage plans, health savings accounts, or plans that qualify as excepted benefits. Excepted benefits include (when certain requirements are met) employee assistance programs, dental and vision coverage and health FSAs. SBCs are required for health reimbursement arrangements; however, an HRA integrated with other major medical coverage under a group health plan does not need to separately satisfy the SBC requirements. The SBC is prepared for the other major medical coverage and the effects of employer allocations to an account under the HRA can be denoted in the appropriate spaces on the SBC. Shortened SBC The regulations propose to shorten the sample SBC template from four double-sided pages to two and a half double-sided pages. The proposed regulations would remove a significant amount of information that is not required by law and that has been identified as not useful to consumers in choosing a plan. Content Changes to New SBC Template Other changes to the SBC template include: Adding a cost example for a simple foot fracture treated in an emergency room Authorizing the continued use of the coverage example calculator

7 Removing references to annual limits for essential health benefits and preexisting condition exclusions Revising minimum essential coverage and minimum value information and requiring it to be included in the SBC Allowing (but not requiring) premium information to be included in an SBC Clarifying that for contact information, only issuers must include an Internet web address where a copy of the actual individual coverage policy or group certificate coverage can be reviewed and obtained Some definitions in the uniform glossary have been changed and new medical terms have been added. Additional terms related to health care reform such as minimum value and cost-sharing reductions have also been added. Clarification on Providing the SBC Issued by Issuer: When a health insurance issuer offering group health insurance provides the SBC to the employer before application for coverage, the requirement to provide an SBC upon application would be deemed satisfied unless there is a change to the information required to be in the SBC. If the information changes, a new SBC that includes the correct information would have to be provided upon application. If the plan sponsor is negotiating coverage terms after an application has been filed and the information required to be in the SBC changes, the issuer would not be required to provide an updated SPD (unless requested) until the first day of coverage. The updated SBC would have to reflect the final coverage terms under the contract, certificate or policy of insurance that was purchased. Issued by Employer: If a plan provides an SBC to employees prior to application for coverage, the plan is not required to automatically provide another SBC upon application if there is no change to the information required to be in the SBC. However, if there is any change to the information by the time the application is filed, the plan must update and provide a current SBC as soon as practicable following receipt of the application, but in no event later than 7 business days following receipt of the application. If the terms of coverage are not finalized after an application has been filed and the information changes, the plan is not required to provide an updated SBC (unless requested) until the first day of coverage. The updated SBC should reflect the final coverage terms under the contract, certificate or policy of insurance that was purchased. Elimination of Duplication The proposed regulations clarify prior guidance and would help prevent unnecessary duplication where (a) a group health plan contracts with another party who agrees to assume responsibility to provide the SBC,(b) a group health plan uses two or more insurance products from different issuers to insure benefits under a single group health plan, and (c) the SBC for student health insurance coverage is provided by another party, such as an institution of higher education. Employer Action No employer action is required at this time until final regulations are issued. For templates, instructions and related materials, visit: regulations/ summaryofbenefits.html 7

8 FEBRUARY Published on January 15, 2014 Retroactive 2014 Qualified Transit/ Vanpooling Exclusion Adjustment The monthly exclusion limitation for transportation in a commuter highway vehicle (vanpool) and any transit pass was previously announced as $130 for calendar year 2014, and the monthly exclusion limitation for qualified parking expenses was $250. Congress recently enacted the Tax Increase Prevention Act. Section 103 of the Act amends the prior limits and raises the 2014 pre-tax transit and vanpool limit from $130 to $250, once again retroactively establishing parity with the pre-tax parking benefit for the year. Employers interested in making adjustments will need to comply with the procedures in IRS Notice released on January 8, Administrators of these programs are working to implement the increased benefit level into their systems and will be communicating the process for moving forward with the increased limits. The limits for 2015 are not affected by this change and remain at $130 and $250, respectively. Further information, including how an employer can use its fourth quarter Form 941 to reflect changes in the excludable amount for transit benefits provided in all quarters of can be accessed in IRS Notice at: Published on February 3, Federal Poverty Line Amounts Issued 8 The Department of Health and Human Services has announced the Federal Poverty Line ( FPL ) amounts, as indexed for Why is this Important? Beginning in 2015, large employers may be subject to the employer penalty under the Affordable Care Act if they do not offer affordable, minimum value coverage to all full-time employees and at least one full-time employee receives a subsidy in the Exchange. The FPL is relevant to the affordability of the coverage, as well as eligibility for a subsidy. Regarding affordability, coverage is considered to be affordable if an employee s required contribution does not exceed 9.5% of the employee s household income. For affordability purposes, a large employer satisfies the FPL safe harbor with respect to an employee for a calendar month if the employee s required contribution for the large employer s lowest cost self-only coverage that provides minimum value does not exceed 9.5% of a monthly amount determined as the FPL for a single individual for the applicable calendar year, divided by 12. For example, based on the 2015 levels (see below), for affordability safe harbor purposes, the applicable FPL is the FPL for the state in which the employee is employed. The FPL is $11,770 for a single individual for every state (and Washington D.C.) except Alaska or Hawaii. So, if the employee s required contribution for the calendar month for the lowest cost self-only coverage that provides minimum value is $93.18 (9.5% of $11,770/12) or less, the employer meets the FPL safe harbor. Regarding eligibility for a subsidy, an individual is only eligible for a subsidy in the Exchange if s/he is within % of the FPL and is not offered affordable, minimum value group coverage. For subsidy eligibility purposes, for 2015, the applicable FPL is the FPL for the

9 state in which the employee resides % of the FPL is $11,770- $47,080 for a single individual and $24,250-$97,000 for a family of four for every state (and Washington D.C.), except Alaska or Hawaii. Below are the 2015 HHS poverty guidelines: 2015 Poverty Guidelines for the 48 Contiguous States and the District of Columbia Persons in family/household Poverty guideline 1 $11,770 2 $15,930 3 $20,090 4 $24,250 5 $28,410 6 $32,570 7 $36,730 8 $40,890 For families/households with more than 8 persons, add $4,160 for each additional person Poverty Guidelines for Alaska Persons in family/household Poverty guideline 1 $14,720 2 $19,920 3 $25,120 4 $30,320 5 $35,520 6 $40,720 7 $45,920 8 $51,120 For families/households with more than 8 persons, add $5,200 for each additional person Poverty Guidelines for Hawaii Persons in family/household Poverty guideline 1 $13,550 2 $18,330 3 $23,110 4 $27,890 5 $32,670 6 $37,450 7 $42,230 8 $47,010 For families/households with more than 8 persons, add $4,780 for each additional person. Final regulations specify that employers are permitted to use the guidelines in effect 6 months prior to the beginning of the plan year, in order to provide employers with adequate time to establish premium amounts in advance of the plan s open enrollment period. 9

10 FEBRUARY Published on February 18, 2015 Medicare Part D Reminder to Notify CMS Employers sponsoring a group health plan are required to report information on the creditable status of the plan s prescription drug coverage to the Centers for Medicare and Medicaid Services (CMS). Employers must use CMS s online reporting system to provide this information at: CCDisclosureForm.asp#TopOfPage As a reminder, notice must be provided by the following deadlines: Within 60 days after the beginning date of the plan year; Within 30 days after the termination of the prescription drug plan; and An employer with a calendar-year plan (January 1 December 31, 2014) must complete this reporting no later than March 1, You can find additional guidance on completing the form, including screen shots, at: CCDisclosure.asp#TopOfPage A Help Line is also available, should you experience technical issues or an error message when submitting the online disclosure form. The Help Line can be reached at Within 30 days after any change in the creditable coverage status. Published on February 19, 2015 Final Forms Released for Individual and Employer Mandate Reporting 10 Recently, the Internal Revenue Service released final forms and instructions for reporting on the individual mandate (Code Sec. 6055) and the employer mandate (Code Sec. 6056). While these final forms (1094-C and 1095-C) reference calendar year 2014, reporting for 2014 is not required. Employers will be subject to these reporting requirements for 2015 with filings due in early We expect revised forms reflecting the year 2015 to be issued in the future. These finalized forms and instructions provide us with better insight into the information that employers must collect and track during 2015 in order to comply with this reporting requirement. In general, the instructions provide general clarification and additional examples that make the instructions more manageable than before. Notable changes include the following: Previously, there was confusion as to how to report self-insured employersponsored health insurance coverage for non-employees such as non-employee directors, an individual who was a retired employee during the entire year, or a nonemployee COBRA beneficiary. The final instructions clarify that employers with self-insured plans may use Forms C and 1094-C for non-employees (as opposed to Forms 1094-B and 1095-B) to report minimum essential coverage. Those individuals will be reported on Form C by using Code 1G (offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured

11 coverage for one or more months of the calendar year) and completing Part III. The instructions clarify that an employee who is treated as having been offered health coverage for purposes of section 4980H (even though not actually offered) is treated as offered minimum essential coverage for reporting purposes. For example, for the months for which the employer is eligible for dependent coverage transition relief, non-calendar year transition relief, or multiemployer arrangement interim guidance (if the employer is contributing on behalf of an employee but the employee is not eligible for coverage under the multiemployer plan) with respect to an employee, that employee should be treated as having been offered minimum essential coverage. Waiting periods may be reported using the limited nonassessment period code, 2D. Employees in an initial measurement period will not be counted for purposes of determining the total percentage of fulltime employees offered coverage. There is clarification on which code prevails when more than one code could be used. Code 2C generally trumps everything. Employers should always use Code 2C if the employee was enrolled in coverage, but only if he or she was enrolled for the entire month. Under the Qualifying Offer Method and the Qualifying Offer Transition Relief Method, it is now clear that full-time employees covered by a self-insured plan cannot be furnished the alternative statement for purposes of Part III, but should be provided Form 1095-C. We will be providing additional information on these forms in the coming weeks. Large employers should review these forms and instructions and begin tracking and collecting data in For the revised forms and instructions, visit: Additional clarification is provided in areas where completing the forms for a self-insured plan are different than for an insured plan. 11

12 MARCH Published on March 10, 2015 Anthem Cyber Attack Frequently Asked Questions 12 On January 29, 2015, Anthem discovered that it had experienced a cyber attack where a hacker gained unauthorized access to Anthem s computer systems and obtained certain personal information regarding Anthem s consumers who were or are currently covered by Anthem or other independent Blue Cross and Blue Shield plans that work with Anthem. This includes, but is not limited to, employer-sponsored group health plans (both insured and selfinsured). Anthem believes the suspicious activity occurred over the course of several weeks beginning in early December The below FAQs are intended to provide you with information regarding the recent cyber attack experienced by Anthem. Information on this situation is changing and should be closely monitored. Whose Information Was Compromised? Anthem s cyber attack resulted in an improper disclosure of nearly 80 million records and may affect participants who received services from an Anthem Blue Cross and Blue Shield contracted health provider from 2004 through the date of the cyber attack. Any health plan participant that was covered under a Blue Cross and Blue Shield Plan could have been impacted if they received services in a state serviced by the Anthem network of health care providers. It may be prudent for any participant who had Blue Cross and Blue Shield coverage from 2004 on to review the website and request credit protection services. Plan sponsors may wish to include in any notice to employees that the breach relates to records created from 2004 on and may affect employees who had previously been covered under other employer sponsored health plans accessing Blue Cross and Blue Shield network providers. Anthem, formerly known as Wellpoint, runs health care plans under the Blue Cross Blue Shield, Empire Blue Cross, Amerigroup, Caremore, Unicare, Healthlink, DeCare, HealthKeepers and Golden West brands. What Information Was Compromised In The Breach? Anthem has indicated that to date, they believe certain personal information, including names, dates of birth, member ID numbers, social security numbers, street addresses, s and employment and income information has been compromised. Anthem does not currently believe that credit card or detailed medical information (such as claims, test results or diagnostic codes) were compromised. Is The Anthem Cyber Attack A Breach Under HIPAA? According to a Town Hall conference call on February 11, 2015 and a letter provided to plan sponsors dated February 23, 2015 from Kenneth Goulet, President, Commercial and Specialty Business at Anthem, Anthem views the unauthorized access of information as a result of this cyber attack a breach under HIPAA and under certain state privacy laws. Anthem continues to investigate this issue and work with applicable regulators at the federal and state level. Generally, self-insured group health plans that contract with Anthem as a TPA are subject to HIPAA breach rules, while Anthem is solely responsible for HIPAA breach issues for fully insured plans that do not receive PHI. Larger fully insured health plans that have access to or are provided with PHI will need to assure that they are compliant with HIPAA breach rules if their participants were affected. What Are Plan Sponsor Obligations? Because group health plans are subject to the HIPAA Privacy and Security Rules, the plan sponsor has obligations to determine whether a breach of protected health information (PHI) has occurred and, if so, provide notification to affected participants, cure the cause of the breach, and attempt to address any harm that may have occurred to a participant as a result of the breach.

13 What Do Plan Sponsors Need To Do? Hopefully not much. Anthem has outlined, in the letter previously referenced, that they will be assisting clients in fulfilling obligations under HIPAA or state privacy laws. Their goal is to promote a consistent message to potentially impacted individuals. In that regard, Anthem intends to issue notices to affected participants and to appropriate state and federal regulators. Anthem has indicated that it believes these notices will satisfy the plan sponsor notice requirements, including notice obligations under the HIPAA breach notification regulations issued. Specifically, according to the letter, Anthem has taken or intends to take the following actions: As a business associate with health plans, Anthem will provide to the plan sponsor written notice of the breach and provide information as required by HIPAA within sixty (60) days after Anthem discovered the breach; Anthem will provide, on behalf of the health plan, notice to potentially impacted individuals for whom Anthem has contact information within legally required timeframes; Anthem will deliver written notice to identified state regulators as required by state data breach notification laws and that notice will reference any affected health plan by name; Anthem will make substitute notice under HIPAA or state data breach notification laws on behalf of the affected health plan to potentially impacted individuals for whom Anthem has insufficient or out-of-date contact information or where otherwise permitted by law; and Anthem will notify federal regulators on behalf of the health plan, including the Department of Health and Human Services Office for Civil Rights, and that notice will reference specifically affected health plans by name. Anthem has indicated that while it does not provide legal advice, it believes that all notices already delivered, and those that will be delivered in the future, comply with the applicable laws that require those notices. It is Anthem s position that these notices will fulfill both Anthem and affected health plan s notice obligations relating to the breach of participant information. However, Anthem encourages affected health plans to seek advice from counsel to address specific questions or concerns. What Is Anthem Doing To Help Affected Participants? Anthem is notifying potentially impacted current and former members by U.S. Postal mail regarding the cyber attack and is including information on how individuals may protect themselves. One service Anthem is offering includes identity protection and repair services free of charge. Anthem is working with AllClear ID, an identity protection provider, to offer 24 months of identity theft repair and credit monitoring services to current or former members of an affected Anthem plan dating back to Anthem established a website for ongoing information regarding this situation, What Steps Should Plan Sponsors Take Now? Plan sponsors should do the following: Assess whether health plan participants may have been affected by the Anthem breach. For self-insured plans using Anthem as a TPA, determine what contracts the plan might have with Anthem (TPA service agreement, BAA agreements, etc.) and whether those contracts impact Anthem s obligations to the plan. For insured plans, Anthem is the Covered Entity so it is directly responsible for contacting affected participants. Notify affected participants of the opportunity to obtain identity protection by directing them to the com website. Consult with counsel to assess whether Anthem s actions on behalf of your health plan satisfy any applicable HIPAA and state law privacy or notice obligations the plan may have. 13

14 MARCH Published on March 11, 2015 Final FMLA Rules Regarding Same-Sex Spouses 14 The DOL amended the regulatory definition of spouse under the Family and Medical Leave Act ( FMLA ) so that spouse for purposes of FMLA rights includes a same-sex spouse, regardless of where the employee and spouse live. This means the place of celebration will determine whether an individual is a spouse under FMLA. This change is effective March 27, Current FMLA regulations use a state of residence rule, recognizing a spouse under the law of the state in which the couple resides. Background In June 2013, the Supreme Court, in United States v. Windsor, struck down the federal definition of marriage and spouse under Section 3 of the Defense of Marriage Act ( DOMA ), holding that same-sex marriages valid under state law are recognized at the federal level. The decision affects over 1,100 sections of federal law that have a provision based on marriage, including the FMLA. In a nutshell, the FMLA requires certain employers to permit eligible employees to take up to 12 weeks (26 weeks in the case of caring for an injured service member) of unpaid, job-protected leave each year because of a new baby, to care for an immediate family member who has a serious health condition, or because of their own serious health condition, or because of an emergency when a family member is called to active military duty. A covered employer is required to maintain group health plan benefits for an employee on FMLA leave on the same terms and conditions as if the employee had continued to work. When the employee returns from FMLA leave, the employer must restore the all the employee s benefits. Following Windsor, the DOL s FMLA guidance, revised in August 2013, required employers subject to the FMLA to extend FMLA rights to an eligible employee in connection with his or her same-sex spouse only when the employee and spouse reside in a state that recognizes same-sex marriage; FMLA rights related to a same-sex spouse currently do not apply to an employee residing in a state that does not recognize same-sex marriage. The Change Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, as proposed in June 2014, final regulations now have husband or wife

15 refer to the other person with whom an individual entered into marriage as defined or recognized under state law for purposes of marriage in the state in which the marriage was entered into or, in the case of a marriage entered into outside of any state, if the marriage is valid in the place where entered into and could have been entered into in at least one state. This definition includes an individual in a same-sex or common law marriage that either (1) was entered into in a state that recognizes such marriages or, (2) if entered into outside of any state, is valid in the place where entered into and could have been entered into in at least one state. The rule means that an eligible employee, regardless of where s/he lives, is able to: take qualifying exigency leave due to his/ her same-sex spouse s covered military service; or take military caregiver leave for his/her same-sex spouse. The change entitles eligible employees to take FMLA leave to care for their stepchildren (children of the employee s same-sex spouse) even if the in loco parentis requirement of providing day-to-day care or financial support for the child is not met. The change also entitles eligible employees to take FMLA leave to care for their stepparents (same-sex spouses of the employee s parents), even though the stepparents never stood in loco parentis to the employee. take FMLA leave to care for his/her same-sex spouse with a serious health condition; Published on March 12, 2015 CMS Announces Special Enrollment Period in Federal Exchanges The Centers for Medicare & Medicaid Services ( CMS ) announced on February 20, 2015 a special enrollment period for individuals and families who did not have health coverage in 2014 and are subject to the shared responsibility le their 2014 taxes in states which use the Federally-facilitated Marketplaces ( FFM ). This special enrollment period will allow those individuals and families who were unaware or didn t understand the implications of this new requirement to enroll in 2015 health insurance coverage through the FFM. For those who were unaware or didn t understand the implications of the fee for not enrolling in coverage, CMS will provide consumers with an opportunity to purchase health insurance coverage from March 15 to April 30. Those eligible for this special enrollment period live in states with a Federally-facilitated Marketplace and: currently are not enrolled in coverage through the FFM for 2015, attest that when they filed their 2014 tax return they paid the fee for not having health coverage in 2014, and attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment (February 15, 2015) in connection with preparing their 2014 taxes. If a consumer enrolls in coverage before the 15th of the month, coverage will be effective on the first day of the following month. Many state-based Exchanges are offering an extension as well. Below are the special enrollment periods for the California, Connecticut and New York state-based Exchanges: California: February 23 through April 30 Connecticut: April 1, through April 30 New York: March 1 through April 30 15

16 MARCH Published on March 19, 2015 Guidance Issued Regarding Supplemental Excepted Benefits The Departments of Labor ( DOL ), Health and Human Services ( HHS ), and the Treasury (collectively, the Departments ) have become aware of health insurance carriers selling supplemental products that provide a single benefit. At least one carrier is characterizing this type of coverage as an excepted benefit. These carriers claim that the products meet the criteria for supplemental coverage to qualify as an excepted benefit outlined in the Departments guidance and are designed to fill in the gaps of primary coverage in the sense that they are providing a benefit that is not covered under the primary group health plan. The Departments issued an FAQ that provides guidance on whether health insurance coverage that supplements group health coverage by providing additional categories of benefits can be characterized as supplemental excepted benefits. Background The Public Health Service Act ( PHSA ) does not apply to excepted benefits including supplemental excepted benefits. The PHSA requirements include: Dependent coverage for children under age 26; Coverage of preventive services; Preexisting condition prohibition; Lifetime limits on essential benefits prohibition; Annual limits on essential benefits restriction; Nondiscrimination rule for insured plans; and New appeals process. A supplemental excepted benefit, under a safe harbor, is a separate policy, certificate, or contract of insurance that satisfies all of the following requirements: 1. Independent of primary coverage. The supplemental policy, certificate, or contract of insurance must be issued by an entity that does not provide the primary coverage under the plan. For this purpose, entities that are part of the same controlled group of corporations or part of the same group of trades or businesses under common control, within the meaning of section 52(a) or (b) of the Code, are considered a single entity. 2. Supplemental for gaps in primary coverage. The supplemental policy, certificate, or contract of insurance must be specifically designed to fill gaps in primary coverage, such as coinsurance or deductibles, but does not include a policy, certificate, or contract of insurance that becomes secondary or supplemental only under a coordination-of-benefits provision. 3. Supplemental in value of coverage. The cost of coverage under the supplemental policy, certificate, or contract of insurance must not exceed 15% of the cost of primary coverage. Cost is determined in the same manner as the applicable premium is calculated under a COBRA continuation provision. 16

17 4. Similar to Medicare supplemental coverage. The supplemental policy, certificate, or contract of insurance that is group health insurance coverage must not differentiate among individuals in eligibility, benefits, or premiums based on any health factor of an individual (or any dependent of the individual). Relief Provided by the FAQ One of the requirements that must be satisfied in order to qualify as a supplemental excepted benefit, as stated above, is the policy must be supplemental for gaps in primary coverage. Regarding this requirement, the Departments will not initiate an enforcement action as long as the coverage that provides coverage of additional categories of benefits are not essential health benefits in the applicable state where marketed (as opposed to filling in cost-sharing gaps under the primary plan). The Departments encourage states that have primary enforcement authority over the provisions of the PHSA, to utilize the same enforcement discretion under such circumstances. Published on March 19, 2015 Relief for Small Employers Reimbursing Individual Policies An employer cannot offer employees cash to reimburse the purchase of an individual policy, whether or not the employer treats the money as pre-tax or post-tax to the employee. Such arrangements (called employer payment plans ) are subject to the market reform provisions of the Affordable Care Act ( ACA ), including prohibition on annual limits and the requirement to provide certain preventive services without cost sharing with which it cannot comply. These arrangements may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee). determined annually, the specific relief is (1) for 2014 for employers that are not ALEs for 2014 and (2) for January 1 through June 30, 2015 for employers that are not ALEs for This relief does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums. Recently, the Departments of Labor ( DOL ), Health and Human Services ( HHS ), and the Treasury (collectively, the Departments ) provided temporary relief to employers that are not applicable large employers ( ALEs ) from this rule until July 1, An ALE for a calendar year is generally an employer who employed an average of at least 50 full-time employees (taking into account full-time equivalent employees) on business days during the preceding calendar year. For determining whether an entity was an ALE for 2015, an employer may determine its status as an applicable large employer by reference to a period of at least six consecutive calendar months, as chosen by the employer, during the 2014 calendar year. Since ALE status is 17

18 MARCH Published on March 25, 2015 Should Plan Years be Changed to Delay Compliance with ACA Provisions? 18 Representatives from several insurance carriers are encouraging employers with full-time employees to move their policy years to December 1 November 30, effective December 1, 2015, to delay certain design requirements applicable to non-grandfathered group health plans for plan years beginning on or after January 1, These design requirements are: Small, insured group health plans must offer essential benefits and provide a bronze level of coverage. Insurance carriers will be subject to new underwriting rules with respect to small, insured groups. Instead of using experience rating, carriers will use community rating. Rating variations will be restricted to (a) benefit coverage elected (plan and tier), (b) geographic area, (c) age, limited to a ratio of 3 to 1 for adults, and (d) tobacco use, limited to a ratio of 1.5 to 1. The definition of small employer will increase from an employer with up to 50 employees to an employer with up to 100 employees, beginning with the 2016 plan year. However, it is possible that this could be delayed. There are compliance issues associated with changing a plan year importantly: Changing the plan year to later in the calendar year will expose a mid-sized employer to the employer penalty as of January 1, 2015 rather than the first day of the 2016 plan year. Changing plan years to delay the effective date of certain ACA-related mandates is arguably impermissible. Below is a summary of these compliance issues. It is important that employers considering changing their policy years consult counsel. Plan Year vs. Policy Year First, changing a policy year is not relevant for health care reform purposes. The plan year is relevant. A plan year is an accounting period. It is usually the same as the policy year (the period for which rates are locked in), but not always. To confirm the plan year, employers can examine the summary plan description and/or Form In addition to any policy year change, there should be a plan year change. Additionally, if employees pay premiums on a pre-tax basis, there should be a plan year change for the cafeteria plan. Any plan year change would have to be properly documented. It may be desirable to change other policy years and plan years (e.g., for the disability and

19 life insurance plans) as well to maintain a consistent program Transition Relief for Employers with Full-Time Employees Beginning in 2015, large employers can be subject to a penalty when not offering affordable, minimum value coverage to all fulltime employees. The final rules provide relief for midsized employers to delay the employer penalty until The transition relief applies to all calendar months of 2015 plus any calendar months of 2016 that fall within the employer s 2015 plan year; it will cover non calendar-year plans, but only if the employer satisfies certain criteria one of which is that the employer did not modify the plan year after February 9, 2014 to begin on a later calendar date (for example, changing the start date of the plan year from January 1 to December 1). Thus, if a mid-sized employer changes its plan year to later in the calendar year, it will no longer be eligible for the transition relief and may be subject to the employer penalty as of January 1, Changing the Plan Year to Avoid Federal Law Although there does not appear to be any specific prohibition at this time, changing a plan year for the purpose of avoiding Federal law has been prohibited historically in various benefits contexts, including one provision applicable to health care reform. Examples include the following: Under guidance issued under health care reform, for a health FSA, a short plan year may only be used for a valid business purpose which does not include delaying application of the $2,500 limit. If a change in the plan year does not satisfy this valid business purpose requirement, the plan year for the cafeteria plan remains the plan year that was in effect prior to the attempted change. IRS Notice A cafeteria plan can have a short plan year for a valid business purpose. A plan year may not be changed if a principal purpose of the change is to circumvent the requirements of Code 125 or the regulations thereunder. IRS Prop Reg (d)(2). For merger and acquisition purposes, changing a plan year must be done for a valid business purpose. Where a transaction has no substantial business purpose other than the avoidance or reduction of Federal tax, the tax law will not regard the transaction. See Gregory v. Helvering, 293 U.S. 465 (1935). For COBRA purposes, if a principal purpose of establishing separate plans is to evade any requirement of law, then the separate plans will be considered a single plan to the extent necessary to prevent the evasion. IRS Reg B-2, Q&A-6(c). For ERISA purposes, a plan is deemed to not be established under a collective bargaining agreement for any plan year in which the agreement is a scheme, plan, stratagem, or artifice of evasion, a principal intent of which is to evade compliance with state law and regulations applicable to insurance. 29 CFR (c)(2). In the multiemployer pension plan context, withdrawal liability exists under ERISA 4212(c) where one of the primary purposes of the transaction is to avoid withdrawal liability, even if that isn t the only purpose. See Santa Fe Pacific Corp. v Central States, Southeast & Southwest Areas Pension Fund, 22 F3d 725 (7th Cir. 1994). In addition, with respect to any IRS or DOL audit, senior agents/investigators have wide discretion in assessing and waiving penalties. They have been known to go much easier on employers that appear to be making honest efforts to comply; they are generally less inclined to be kind when plan sponsors are taking advantage of the flexibility they have with respect to operating and administering plans. SBC Notice of a modification to enrollees should be provided no later than 60 days prior to the date the modification will take effect because the group health plan is making a material modification to the SBC outside of renewal or reissuance (e.g., a mid-year plan design change). 19

20 APRIL Published on April 9, Cost-Sharing Limits, Reinsurance Fee, and Other Changes Related to the Exchange 20 On February 27, 2015, the Department of Health and Human Services ( HHS ) changed cost-sharing and transitional reinsurance program fee limits and released standards for health insurers and the Exchange (a.k.a. the Health Insurance Marketplace). This article identifies a few items of note for employers Cost-sharing Limits For 2016, the maximum annual out-of-pocket limits for non-grandfathered plans are $6,850 for individual coverage and $13,700 for family coverage. These limits generally apply with respect to any essential health benefits ( EHBs ) offered under the group health plan. The final regulations established that starting with the 2016 plan year, the self-only annual limitation on cost sharing applies to each individual, regardless of whether the individual is enrolled in other than self-only coverage, including in a family HDHP. Transitional Reinsurance Program The reinsurance fee for 2016 is $27 per covered individual is the final year for the transitional reinsurance program. Generally, enrollment counts for the reinsurance fee are due by November 15 of the benefit year. Payment is due by January 15 of the following year (and November 15 of the following year if paying in two installments). The regulations make clear that when these dates fall on a Saturday, Sunday, or holiday, submission of this information and/ or payment is due by the next business day. For 2015: Enrollment counts are due by November 16, The fee of $44/per covered life: if making a single payment, is due by January 15, 2016; or if paying in two installments, the first payment of $33/covered life is due by January 15, 2016 and the second payment of $11/covered life is due by November 15, For 2016: Enrollment counts are due by November 15, The fee of $27/covered life: if making a single payment, is due by January 16, 2017; or if paying in two installments, the first payment of $21.60 per covered life is due by January 16, 2017 and the second and final payment of $5.40 per covered life is due by November 15, The regulations clarify the application of the snapshot count and snapshot factor counting methods to a plan that is established or terminated, or that changes funding mechanisms, in the middle of a quarter. Specifically, if the plan had enrollees on any day during a quarter and if the contributing entity uses either the snapshot count or snapshot factor method, it must choose a set of counting dates for the counting period such that the plan has enrollees on each of the dates, if possible. The enrollment count for a date during a quarter in which the plan was in existence for only part of the quarter can be reduced by a factor reflecting the amount of time during the quarter for which the plan or coverage was not in existence. Consistent with the proposed regulations, the final regulation provides that self-funded expatriate plans are not required to pay the reinsurance fee for 2015 and 2016 benefit years. Insured expatriate plans do not make reinsurance contributions. Self-insured plans that do not use a TPA do not make reinsurance contributions in the 2015 and 2016 benefit years. The final regulations clarify that a TPA is an entity that is not under

21 common ownership with the self-insured group health plan or its sponsor that provides administrative functions in connection with the core administrative services. Common ownership should be determined under Code Sec. 414(b) and (c). Open Enrollment Period for the Exchange For benefit year January 1, 2016, the annual enrollment period for the Exchange begins November 1, 2015 and extends through January 31, For the benefit year beginning on January 1, 2016, the Exchange must ensure coverage is effective: January 1, 2016 for plan selections received by the Exchange on or before December 15, 2015; February 1, 2015 for plan selections received by the Exchange from December 16, 2015 through January 15, 2016; and March 1, 2016 for plan selections received by the Exchange from January 16, 2016 through January 31, Small Business Health Options Program (SHOP) In an effort to streamline the administration of the SHOP, the regulations allow the SHOP to assist employers in the management of COBRA continuation of coverage. The regulations provide that the SHOP is permitted to collect COBRA premium from any person enrolled in COBRA coverage through the SHOP consistent with applicable and the terms of the group health plan. The regulations also align the SHOP rules with the COBRA rules, including COBRA eligibility for dependents and former dependents. Note that SHOP does not have capabilities to manage the entire COBRA process (e.g., send out the notices). Minimum Value Plans In November 2014, in Notice , HHS, the Treasury, and the Internal Revenue Service (collectively, the Departments ) announced their intent to issue regulations clarifying that a group health plan will not provide minimum value (MV) if it excludes substantial coverage for in-patient hospitalization services or physician services (or both) (referred to as a Narrow MV Plan ). There is a very narrow exception to this general rule if, and only if, an employer with a plan year that begins on or before March 1, 2015 has entered into a binding written commitment to adopt or has begun enrolling employees in a Narrow MV Plan prior to November 4, 2014, in which case it will not be subject to the Employer Penalty for the 2015 plan year. Consistent with Notice and proposed regulations, these regulations finalized the requirement that an employersponsored plan must provide substantial inpatient hospital services and physician services, as well as meet the quantitative standard of the actuarial value of benefits plan (cover 60% of the total allowed costs) in order to provide MV. Pediatric Age The regulations provide that pediatric benefits must be provided at least until the end of the month in which the enrollee turns 19. Habilitative Services Habilitative services and rehabilitative services are part of the EHB package. The final regulations adopt a uniform definition of habilitative services to clarify the difference between habilitative and rehabilitative services. Habilitative services are provided for a person to attain, maintain, or prevent 21

22 APRIL deterioration of a skill or function never earned or acquired due to a disabling condition. Rehabilitative services, are provided to help a person regain, maintain or prevent deterioration of a skill or function that has been acquired but then lost due to illness, injury or disabling condition. The final regulations adopt the definition of habilitative services from the Uniform Glossary of Health Coverage and Medical terms, effective for plan years beginning in 2016, and require carriers to have separate visit limits on habilitative services and rehabilitative services for plan years beginning in Medical Loss Ratio The final rule clarifies that that federal and state employment taxes should not be excluded from premium in the MLR and rebate calculations. It also provides that subscribers of non-federal governmental or other group health plans not subject to ERISA must receive the benefit of MLR rebates within three (3) months of receipt of the rebate by their group policyholder, just as subscribers of group health plans subject to ERISA do. Published on April 16, 2015 Cadillac Tax Preliminary Guidance, Part 1 22 The IRS issued preliminary guidance regarding the excise tax on high cost employer-sponsored health coverage, commonly known as the Cadillac Tax. Notice describes potential approaches being considered in developing guidance under Section 4980l. Specifically the Notice addresses (1) the definition of applicable coverage, (2) the determination of the cost of applicable coverage, and (3) the application of the annual statutory dollar limit to the cost of applicable coverage. The IRS will seek comments on potential approaches to a number of issues both with respect to this Notice and a subsequent notice that is expected to address other issues. Additionally, there will be an opportunity to comment after the proposed rule is issued. The Notice is lengthy and full of complicated details. To simply the information, we will release two articles regarding this information. This first article addresses the definition of applicable coverage. Background Beginning January 1, 2018, Code Section 4980l imposes a 40% excise tax on any excess benefit provided to an employee that exceeds prescribed thresholds. An excess benefit is the excess, if any, of the aggregate cost of the applicable coverage of the employee for the month over the applicable dollar limit for the employee for that month. The 2018 thresholds are $10,200 for self-only coverage and $27,500 for coverage other than self-only (these thresholds are annualized and adjusted in certain circumstances). For example, an employee s aggregate cost of applicable coverage for a month is $600. Since she has self-only coverage, the threshold is $850 ($10,200/12). There would be no excise tax because the $600 falls below the $850 threshold. However, if the aggregate cost was $1,000, then a 40% excise tax on $150 applies ($1,000 - $850), totaling $60 for the month. Applicable Coverage Applicable coverage generally means coverage under a group health plan (insured or self-insured) that is made available to an employee by an employer that is excludable from the employee s income (or would be excludable if it were employer-provided coverage). In determining Cadillac Tax liability, it is important to first determine what health plan benefits are considered applicable coverage. While the Notice provides helpful clarification as to types of benefits potentially impacted by this tax, it also raises a number or questions regarding HSAs, on-site clinics, self-insured dental and vision coverage and EAPs.

23 Applicable Coverage Major medical coverage Health FSA HSA (employer contributions and pre-tax employee contributions through a cafeteria plan) On-site medical clinics Coverage for specified disease, illness or hospital indemnity policy when paid by the employer or on a pre-tax basis Executive physicals HRAs Not Applicable Coverage Many excepted benefits Long-term care Insured dental and vision (see discussion of self-insured dental and vision) Coverage for specified disease, illness or hospital indemnity policy when paid for on an after tax basis Employee after tax contributions to an HSA It is important to note that governmental plans, retiree plans, and multiemployer plans are included as applicable coverage. Health Savings Accounts The IRS anticipates that employer contributions to health savings accounts (HSAs) are applicable coverage. This includes pre-tax salary reduction contributions. The cost of the coverage equals the amount of all employer contributions (including employee pre-tax salary reductions). While the statute defines HSA contributions as applicable coverage (and the IRS s interpretation appears consistent with that definition), the potential implications of this definition are troubling. Notably: While many employers use qualified HDHPs to control cost, the inclusion of employer contributions and employee pre-tax contributions to the HSA associated with this coverage may result in many of these arrangements hitting the excise tax threshold. For example, if an employee with self-only coverage contributed the maximum HSA contribution amount in 2018 and that amount was $3,500, this would leave only $6,700 for the major medical plan and any of the other applicable coverages before an excise tax would apply. If these contributions are included as applicable coverage, employers may be discouraged from making contributions to the employee s HSA to avoid exposure to the Cadillac Tax. In addition, should the employer continue to make a contribution to employees HSAs, the employer likely will become subject to rather stringent comparability rules if pre-tax contributions (through a cafeteria plan) 23

24 APRIL to the HSA account are eliminated in order to reduce potential excise tax liability In the event the ability for an employee to make pre-tax salary reduction elections to an HSA is removed, the convenience factor of contributing to the HSA may be lost which may result in employees contributing less to their HSAs. After-tax contributions made to an HSA are not applicable coverage and will not be included in the calculation of the year-end above-the-line deduction of after-tax HSA contributions made during the calendar year on their personal tax returns. This deduction does not affect the excise tax. On-site Medical Clinics 2. Is available only to current employees; and 3. Is free of charge to employees who use the facility. The IRS seeks comments on the treatment of clinics that meet the criteria described in the COBRA regulations as well as clinics that may provide certain services in addition to (or in lieu of) first aid. While not specifically addressed in the Notice, it is likely that final guidance will include robust on-site clinics in the definition of applicable coverage. Such arrangements that provide a wide array of services beyond first aid and allow employees and their family members to receive services will likely not be considered de minimis. Coverage provided through an on-site medical clinic is generally applicable coverage. However, the IRS anticipates that forthcoming guidance will exclude on-site medical clinics that offer only de minimis medical care to employees. De minimis is not defined and the IRS seeks comments in this area. Notable, the IRS references the COBRA regulations which exclude an on-site clinic located on the employer s premises from the definition of a group plan if the health care provided: 1. Consists primarily of first aid that is provided during the employer s working hours for treatment of a health condition, illness, or injury that occurs during those working hours; Dental and Vision Coverage Insured dental and vision coverages are excluded from the applicable coverage definition and will not be included in the aggregate cost of coverage for purposes of determining excise tax liability. However, it is unclear whether self-insured limited-scope dental and vision coverage are applicable coverage. The regulators may consider excluding self-insured dental and vision benefits that are excepted benefits from applicable coverage, thus excluding the cost of such coverage from the excise tax calculation. Employee Assistance Programs Under recently issued regulations, employee assistance programs (EAPs) that meet certain criteria are considered excepted benefits. The IRS is considering excluding excepted EAPs from the definition of applicable coverage. The IRS seeks comments opposing this exclusion. Unaddressed Benefits The Notice contains no discussion of certain benefits that may be viewed as applicable coverage, including wellness programs and telemedicine. Further guidance on these benefits would be helpful. Additional guidance is expected and it is anticipated that the benefits community will be actively voicing comments in response to this Notice. 24

25 Published on April 29, 2015 Reinsurance Fee Overpayment Refund Request Deadline is April 30 For the 2014 benefit year, contributing entities (insurance carriers and employers with selfinsured group health plans) were required to submit their annual enrollment count and remit their resulting contributions utilizing the ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form (Form) via by December 5, By using this website, the contributing entity (or third party administrators or administrative servicesonly contractors on their behalf) entered their self-reported annual enrollment count in the Form which autocalculated the annual contribution amount due based on the 2014 contribution rate of $63.00 per covered life. The Centers for Medicare & Medicaid Services (CMS) is aware that some contributing entities may have misreported their annual enrollment count for the 2014 benefit year due to misapplying the permitted counting methods or including individuals who are otherwise exempt for purposes of reinsurance payments. This potentially may have resulted in an overpayment. In the case of such an overpayment, where payment has been processed, the contributing entity must re-file the Form with the correct annual enrollment count and CMS will rerun the payment associated with the erroneous filing. An employer must also send an to: For the 2014 benefit year, contributing entities must send refund requests resulting from annual enrollment count misreporting to CMS by April 30, 2015 or 90 days from the date of their Form submission, whichever is later. For the 2015 and 2016 benefit years, refund requests resulting from annual enrollment count misreporting must be submitted 90 days from the date of Form submission. Please note that the deadlines outlined above do not apply when a contributing entity: requests a refund because it has paid reinsurance contributions more than once for the same covered life; or correctly applied one of the counting methods requests to change its annual enrollment count and associated payment after the reporting deadline for the applicable benefit year. Inquiries the reinsurance contribution submission process should be sent to reinsurancecontributions@cms.hhs.gov. For more information, contact CMS at the above address. A copy of the announcement of this refund process is available here: Regulations-and-Guidance/Downloads/RIC- Guidance-Refund-Request-Deadline-final-.pdf 25

26 MAY Published on May 8, HSA Limits The IRS released the 2016 limits for health savings accounts (HSAs) and their accompanying high deductible health plans (HDHPs) effective for calendar year Some limits were adjusted from the 2015 amounts. Annual Contribution Limitation For calendar year 2016, the limitation on deductions for an individual with selfonly coverage under a HDHP is $3,350. For calendar year 2016, the limitation on deductions for an individual with family coverage under a HDHP is $6,750. High Deductible Health Plan For calendar year 2016, a HDHP is defined as a health plan with an annual deductible that is not less than $1,300 for selfonly coverage or $2,600 for family coverage, and the annual outof-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for selfonly coverage or $13,100 for family coverage. Non-calendar year plans: In cases where the HDHP renewal date is after the beginning of the calendar year (i.e., a fiscal year HDHP), any required changes to the annual deductible or out-of-pocket maximum may be implemented as of the next renewal date. Catch-up Contribution Individuals who are age 55 or older and covered by a qualified HDHP may make additional catch-up contributions each year until they enroll in Medicare. The additional contribution, as outlined by the statute, is $1,000 for 2009 and thereafter. Published on May 16, 2015 Cadillac Tax Preliminary Guidance, Part 2 26 The IRS issued Notice to begin the process of developing regulatory guidance regarding the excise tax on high cost employer-sponsored health coverage, commonly known as the Cadillac Tax. Beginning January 1, 2018, a 40% excise tax will apply on the cost of applicable coverage that exceeds prescribed thresholds (described later in this article). Our previous article (Part I, dated April 16, 2015) addressed the definition of applicable coverage. Part II looks at how the applicable statutory limit may apply with respect to the cost of coverage and methods to determine the cost of applicable coverage. The IRS seeks comments on these proposed approaches. Dollar Limit Adjustments The statute provides two baseline peremployee dollar limits for 2018: $10,200 for self-only coverage, and $27,500 for coverage other than self-only. The guidance clarifies that these amounts are subject to certain adjustments, as follows: Health cost adjustment percentage (applicable in 2018 only). This adjustment will be applied to the peremployee dollar limit for 2018 to determine the actual dollar limits for that year. Cost of living adjustment (applicable after 2018). For taxable years after 2018, a cost-of-living adjustment based on

27 CPI-U plus one percent will be applied to determine applicable dollar limits. Qualified retirees 1 and high-risk professions 2. An additional amount is added to the dollar limits for qualified retirees and individuals who participate in a plan sponsored by an employer the majority of whose employees covered by the plan are engaged in highrisk professions or who repair or install electrical or telecommunication lines. The additional amounts added to the prescribed thresholds are $1,650 for selfonly coverage and $3,450 for coverage other than self-only. Age and gender adjustment. For 2018 and beyond, the dollar limits for an employer may be increased by an age and gender adjustment if the age and gender characteristics of an employer s workforce are different from those of the national workforce. The amount of this adjustment is to be determined. Multiemployer plans. Coverage provided under a multiemployer plan is treated as coverage other than self-only (e.g., the $27,500 threshold applies to both self-only coverage and coverage other than selfonly). Determination of the Cost of Applicable Coverage This new excise tax will apply on the excess, if any, of the aggregate cost of applicable coverage of an employee for a month over the applicable dollar limit. Under the existing framework, rules similar to the COBRA rules for determining applicable premium will be used to determine the cost of applicable coverage. Given that the regulators have provided limited guidance on determining the cost of COBRA coverage, in particular for self-insured plans and HRAs, guidance issued under section 4980I is likely to affect existing COBRA rules (section 4980B). Currently, the COBRA applicable premium must be determined for a 12-month determination period, and must be determined before the start of such period. For selfinsured plans there are two methods to determine the COBRA applicable premium: the actuarial basis method, and the past cost method. Absent guidance employers and plans must operate in good faith compliance with a reasonable interpretation of the section 4980B statutory requirements. Briefly, the Notice outlines potential approaches to determining the cost of applicable coverage: Similarly situated individuals. The IRS proposes determining similarly situated individuals through mandatory aggregation, aggregating individuals by elected benefit package (e.g., PPO, HMO, or HDHP). Then, individuals will be disaggregated by those who have selfonly coverage and those with other than self-only coverage. This is referred to as mandatory disaggregation. In addition, the IRS is considering whether to allow permissive disaggregation, meaning separate determination of costs of coverage within family coverage based on the number of covered individuals. Another type of permissive disaggregation under consideration is disaggregation based on an employee s similarly situated status such as bona fide employmentrelated criteria (current employee versus former employee status, compensation, bona fide geographic distinctions, etc.). 27

28 MAY The IRS has requested comments on these various aggregation methodologies. Self-insured plans. The IRS is looking to provide guidance that will likely affect not only how the cost of applicable coverage is determined for purposes of the excise tax, but how self-insured plans determine the COBRA applicable premium as well. Notably: With limited exception, the method chosen (actuarial or past cost) would need to be used for at least 5 years (exception for the past-cost method due to significant plan changes). Under the actuarial method, a reasonable estimate of the cost of providing coverage under the group health plan would be based on the actual cost the plan is expected to incur and not minimum or maximum exposure. The IRS asks for comments on whether an accreditation of individuals making these actuarial estimates should be required and whether it would be preferable to provide a specific list of factors that must be satisfied to make this actuarial determination. For the past-cost method, the IRS proposes specific cost factors that would be taken into account to determine cost and how those factors can be applied. HRAs. The IRS has issued very limited guidance on determining the COBRA premium for HRAs. Briefly, the IRS has stated that the COBRA applicable premium for an HRA may not be based on a qualified beneficiary s reimbursement amounts available from the HRA. The IRS proposes a number of mechanisms for determining COBRA costs for HRAs and requests comments on these approaches. Determination period. The IRS also seeks comments as to how the determination period should be set for COBRA and whether that same determination period can be used to determine the cost of applicable coverage. Under existing COBRA rules, the method for calculating the applicable premium must be elected prior to the determination period for which the applicable premium applies. Conclusion Determining the cost of applicable coverage raises a number of issues that affect the Cadillac Tax, COBRA continuation of coverage, and other areas of benefits law 28

29 (e.g., W-2 health coverage reporting). This Notice provides early indications of how the IRS contemplates addressing these issues. Future guidance will have a broad impact on employer sponsored group health plan compliance and plan designs. We will be monitoring future regulatory developments, along with legislative changes that may impact the 2018 excise tax. This is the start of a long regulatory process and additional guidance and opportunity for comments will be forthcoming. For a copy of the Notice and information on how to submit comments, visit: Footnotes 1. A qualified retiree means an individual who is receiving coverage by reason of being a retiree, has achieved the age of 55, and is not entitled to benefits or eligible for enrollment in Medicare. 2. High risk professions include: Law enforcement officers Employees in fire protection activities Individuals who provide out-of-hospital emergency medical care (emergency medical technicians, paramedics and first responders) Longshore workers Construction, mining, agriculture (but not food processing, forestry and fishing industries; and Employees retires from one or more of the listed high risk professions who was engaged in that high risk profession for at least 20 years. JUNE Published on June 1, 2015 FAQs Further Clarify New Embedded Out-of-Pocket Requirement As reported earlier, starting with the 2016 plan year, the selfonly annual limitation on cost sharing for non-grandfathered plans ($6,850 for 2016) applies to each individual, even if the individual is enrolled in family coverage. On May 26, 2015, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued new FAQs further clarifying this new rule, confirming that it applies to all non-grandfathered group health plans, including self-insured plans, large group health plans, and high deductible health plans. The Departments also provided the following example: Assume that a family of four individuals is enrolled in family coverage under a group health plan in 2016 with an aggregate annual limitation on cost sharing for all four enrollees of $13,000. Assume that individual #1 incurs claims associated with $10,000 in cost sharing and that individuals #2, #3, and #4 each incur claims associated with $3,000 in cost sharing (in each case, absent the application of any annual limitation on cost sharing). In this case, because the self-only maximum annual limitation on cost sharing ($6,850 in 2016) applies to each individual, cost sharing for individual #1 for 2016 is limited to $6,850, and the plan is required to bear the difference between the $10,000 in cost sharing for individual #1 and the maximum annual limitation for that individual, or $3,150. With respect to cost sharing incurred by all four individuals under the policy, the aggregate $15,850 ($6,850 + $3,000 + $3,000 + $3,000) in cost sharing that would otherwise be incurred by the four individuals together is limited to $13,000, the annual aggregate limitation under the plan, under the assumptions in this example, and the plan must bear the difference between the $15,850 and the $13,000 annual limitation, or $2,850. For the FAQs, visit: 29

30 JUNE Published on June 9, 2015 Guidance Issued on Coverage for Preventive Items and Services Frequently asked questions (FAQs), prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury were issued on May 12, 2015 with respect to the Affordable Care Act (ACA) requirement for a non-grandfathered group health plan to provide coverage for in-network preventive items and services (including contraception) without any cost-sharing requirements, as summarized below. Contraception Plans must cover without cost sharing at least one form of contraception in each method that is identified by the FDA. FAQs provide that, therefore: 1. Because a plan covers some forms of oral contraceptives, some types of IUDs, and some types of diaphragms without cost sharing does not mean that it can exclude completely other forms of contraception. 2. If multiple services and FDA-approved items within a contraceptive method are medically appropriate for an individual patient, the plan may use reasonable medical management techniques to determine which specific products to cover without cost sharing with respect to that individual. However, if the individual s attending a particular service or FDAapproved item based on a determination of medical necessity with respect to that individual, the plan must cover that service or item without cost sharing. 3. For hormonal contraceptive methods, coverage must include all 3 oral contraceptive methods (combined, progestin-only, and extended/continuous use), injectables, implants, the vaginal contraceptive ring, the on (Plan B/Plan B One Step/Next Choice, Ella), and IUDs with progestin. This clarifying guidance applies to plan years beginning on or after August 1, Well-woman Preventive Care for Dependents If a plan covers dependent children, the plan is required to cover without cost sharing recommended women s preventive care services for dependent children, including recommended preventive services related to pregnancy, such as preconception and prenatal care. Colonoscopies It is not permissible for a plan to impose cost sharing with respect to anesthesia services performed in connection with the preventive colonoscopy if the attending provider determines that anesthesia is medically appropriate for the individual. BRCA Genetic Testing Plans must cover without cost sharing recommended genetic counseling and breast cancer ( BRCA ) genetic testing for a woman who has not been diagnosed with BRCArelated cancer but who previously had breast cancer, ovarian cancer, or other cancer as long as the woman has not been diagnosed with BRCA-related cancer. Sex-specific Recommended Preventive Services Plans cannot limit sex-specific recommended preventive services based on an individual s sex assigned at birth, gender identity, or recorded gender. Whether a sex-specific recommended preventive service that is required to be covered without cost sharing is medically appropriate for a particular individual is determined by the individual s attending provider such as, for example, providing a mammogram or pap smear for a transgender man who has residual breast tissue or an intact cervix. For the FAQs, visit: 30

31 Published on June 9, 2015 Protections for LGBT Workers The EEOC has explained on its website that lesbian, gay, bisexual, and transgender ( LGBT ) individuals may bring valid sex discrimination claims against employers. A memorandum lists insurance issues involving benefits for same-sex couples as an issue of particular interest to the EEOC. Background Title VII, in part, requires that employers may not discriminate as to employment or benefits based on sex. There is no official statutory extension of Title VII s protections to LGBT employees. Older court decisions have concluded that Title VII does not provide a cause of action for sexual orientation discrimination (as opposed to discrimination against women), although recent case law is evolving. EEOC Post A recent EEOC post explains that, based on recent rulings and lawsuits, the EEOC has instructed its investigators and attorneys to counsel individuals who believe they have been discriminated against because of their sexual orientation or transgender status that they may file a complaint of sex discrimination under Title VII. The instructions are derived from a number of actions, including a 2012 EEOC ruling that employment discrimination because of an employee s gender identity is prohibited discrimination based on sex, as well as a 2012 EEOC strategic enforcement plan designating this as an emerging and developing issue. The EEOC position is not binding on courts, although it can carry significant weight. Other Developments In related news: The EEOC and other federal Government agencies released a guide on the rights and processes available to applicants and employees of federal agencies who allege sexual orientation or gender identity discrimination. OSHA published a Guide to Restroom Access for Transgender Workers, providing guidance to employers on best practices regarding restroom access for transgender workers. Employer Action In light of these developments, employers may want to revisit their anti-discrimination policies to ensure that they extend to LGBT employees. With respect to group plans, employers may want to begin to review: Current plan eligibility and coverage rules; and Plan documentation and communications. Employers should look for further guidance. 31

32 JUNE Published on June 11, 2015 PCOR Fee Filing Reminder for Self-Insured Plans The PCOR filing deadline is July 31, 2015 for all self-funded medical plans and HRAs. This is the third filing for plans with the following plan years. The amount for these plan years is $2.08 per covered life. November 1, 2013 October 31, 2014 December 1, 2013 November 30, 2014 January 1, 2014 December 31, 2014 This is the second filing for plans with the following plan years. The amount for these plan years is $2 per covered life. February 1, 2013 January 31, 2014 March 1, 2013 February 28, 2014 April 1, 2013 March 31, 2014 May 1, 2013 April 30, 2014 June 1, 2013 May 31, 2014 July 1, 2013 June 30, 2014 August 1, 2013 July 31, 2014 September 1, 2013 August 31, 2014 October 1, 2013 September 30, 2014 For the Form 720 and Instructions, visit: Federal-Excise-Tax-Return The information is reported in Part II. Please note that Form 720 is a tax form (not an informational return form such as Form 5500). As such, the employer or an accountant would need to prepare it. Parties other than the plan sponsor, such as third party administrators and My Benefit Advisor, cannot report or pay the fee. Short Plan Years Recently, the IRS issued FAQs that address how the PCOR fee works with a self-insured health plan on a short plan year. Does the PCOR fee apply to an applicable self-insured health plan that has a short plan year? Yes, the PCOR fee applies to a short plan year of an applicable self-insured health plan. A short plan year is a plan year that spans fewer than 12 months and may occur for a number of reasons. For example, a newly established applicable self-insured health plan that operates using a calendar year has a short plan year as its first year if it was established and began operating beginning on a day other than Jan. 1. Similarly, a plan that operates with a fiscal plan year experiences a short plan year when its plan year is changed to a calendar year plan year. What is the PCOR fee for the short plan year? The PCOR fee for the short plan year of an applicable selfinsured health plan is equal to the average number of lives covered during that plan year multiplied by the applicable dollar amount for that plan year. Thus, for example, the PCOR fee for an applicable selfinsured health plan that has a short plan year that starts on April 1, 2013, and ends on Dec. 31, 2013, is equal to the average number of lives covered for April through Dec. 31, 2013, multiplied by $2 (the applicable dollar amount for plan years ending on or after Oct. 1, 2013, but before Oct. 1, 2014). See FAQ 12 & 13: Outcomes-Research-Trust-Fund-Fee:- Questions-and-Answers 32

33 Published on June 15, 2015 Form 5500 Filing Reminder For calendar year-end plans, the 2014 Form 5500 is due to be filed electronically on EFAST2 no later than July 31, ERISA requires that Form 5500 be filed with the Department of Labor for most health and welfare plans (for example, medical, dental, and life insurance plans) by the last day of the seventh month following the end of plan year unless an extension (Form 5558) is completed and mailed to the IRS. exempt from this requirement. Certain other exceptions apply such as for church plans and governmental plans. Form 5500 also applies to retirement plans, regardless of employee count. Should you have any questions, please contact your Account Executive. A plan with fewer than 100 covered employees as of the first day of the plan year that is unfunded (no trust) or fully insured is Published on June 25, 2015 Supreme Court Upholds Subsidies On June 25, 2015, the Supreme Court confirmed in a 6-3 decision that premium tax credits and cost-sharing subsidies (referred to as subsidies ) are available in the federal Health Insurance Marketplaces (also referred to as the Exchange ). This ruling effectively removes any challenges to the ability of Exchanges to offer subsidies to qualified individuals. What was the Issue? The Affordable Care Act ( ACA ) established Exchanges as a means of offering health insurance coverage. A state is permitted to establish its own Exchange (known as a staterun Exchange), rely on the federal government to establish an Exchange (known as a federally-run Exchange), or enter into a state/federal partnership Exchange. 33

34 JUNE The issue in this case was whether the IRS set forth rules consistent with the statutory language (as is within its authority) or overstepped its bounds. Under the text of the ACA (creating Code 36B), subsidies are available in an Exchange established by the State under 1311 of the ACA. Subsequent IRS regulations interpreted 36B to permit eligible individuals enrolled in qualified health plans in either a state-based or a federally-facilitated Exchanges to access these subsidies. in a Marketplace. If subsidies were ruled unavailable to FTEs because coverage is accessed through a federal marketplace, there may have been nothing to trigger a penalty. However, this did not happen. Employer Action As subsidies are available in the 50 states and District of Columbia, employers should do nothing different. Employers should continue to monitor their employer penalty exposure and prepare for future requirements such as the requirement to complete Forms 1094-C and 1095-C and the 2018 Cadillac Plan Tax. As described, any such assessment is predicated on an FTE receiving a subsidy Published on June 26, 2015 IRS Releases Draft 2015 Forms 1094-C and 1095-C Last week, the IRS issued draft 2015 Forms 1094-C and 1095-C. The forms are substantially the same as the 2014 forms, except for a couple of changes: Form 1094-C Line 19 (designating the authoritative transmittal) moves from Part II to Part I Form 1095-C A new Plan Start Month field is added (optional for 2015, required for 2016 & beyond) Two new codes will be available to indicate if the employer s offer to a spouse is a conditional offer; the codes will be announced later, presumably when the draft instructions are released significant changes from the 2014 forms. Once finalized, these are the forms that will be used for calendar year 2015 reporting, due in early For more information, see the draft forms, here: Form 1094-C: Form 1095-C: More information on the large employer reporting requirement is also available here: Employers/Information-Reporting-by- Applicable-Large-Employers. Further guidance will be welcome, and we are watching for the draft instructions to be released. However, it is encouraging to see that the regulators did not contemplate 34

35 APPENDIX 35

36 Employer Reporting Guide for Large Employers 6055 and 6056 Reporting for Large Employers

37 Table of Contents Overview of Employer Responsibilities 3 Background 5 What Information To Collect 6 Form 1094-C 7 Form 1095-C 12 Filing and Distributing the Forms 16 Appendix A 18 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

38 3 Overview of Employer Responsibilities Beginning with calendar year (CY) 2015, an applicable large employer (ALE or large employer, as referenced in this summary) must use Forms 1094-C and 1095-C to report the information required under Internal Revenue Code (Code) sections 6055 and 6056 about offers of health coverage to full-time employees (FTEs) and individuals enrollment in health coverage. Briefly: Form 1094-C is used to report to the IRS summary information of each employer and to transmit all Forms 1095-C to the IRS. Form 1095-C is used to report information about each FTE (and in the case of a self-insured plan, each covered individual). These forms are used by the IRS to determine whether: a large employer owes a (shared responsibility) penalty payment under the employer mandate, an employee is eligible for subsidies to purchase health insurance coverage in the Marketplace, and an individual has MEC in order to avoid potential tax penalties under the individual mandate. As the following chart illustrates, an ALE must complete, distribute, and file these forms in the calendar year immediately following the year to which the reporting relates. The first required filing is due in early 2016 for CY Large employer with an insured health plan Large employer with a self-insured health plan What to complete? All applicable parts of Form 1094-C Parts I and II of Form 1095-C All applicable parts of Form 1094-C All parts of Form 1095-C When? A Form 1095-C must be furnished to each FTE by Feb. 1, 2016 for CY 2015 Form 1094-C and all Forms 1095-C must be furnished to the IRS by Feb. 29, 2016 (unless filing electronically, then Mar. 31, 2016) A Form 1095-C must be furnished to each FTE and each covered employee/individual by Feb. 1, 2016 Form 1094-C and all Forms 1095-C must be furnished to the IRS by Feb. 29, 2016 (unless filing electronically, then Mar. 31, 2016) 1 Minimum essential coverage (MEC) is the technical term for most types of health insurance coverage under the ACA. It includes, but is not limited to, employer sponsored group health plan coverage, Medicare, Medicaid, and individual health insurance coverage. MEC does not include excepted benefits (e.g., most dental and vision plans, health FSAs, on-site clinics and some EAPs). For this purpose, it means eligible employer-sponsored group health plan. 2 The health insurance carrier will be responsible for providing information to the IRS and covered employees regarding MEC (using Form 1095-B). My Benefit Advisor 3 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

39 4 Final forms and instructions for 2014 were recently issued. While no reporting is required for 2014, this information provides helpful insight on what data will be collected for CY 2015, the first year of applicability. Instructions: Form 1094-C: Form 1095-C: While payroll vendors and other third parties will likely help employers through this process, it is important that an employer begins to identify the information that must be collected during the CY to satisfy this requirement. This guide is intended to provide you with a comprehensive overview of the reporting requirements under Code sections 6055 and 6056 as it pertains to a large employer with more than 50 full time employees and equivalents. These requirements are effective for CY 2015, forms due in early This guide will: outline the various pieces of information and data needed during the CY to complete year-end reporting; provide a step-by-step guide to completing the Forms; and identify additional requirements for a large employer with self-insured health plan coverage. Some rules to follow when using this guide: While the 2014 Forms and Instructions were recently finalized, the final versions for 2015 have not been issued. Thus, information requested for 2015 may differ from what is outlined in this summary. We will keep you updated with any changes. Regardless of an employer s plan year, reporting is done based on the CY (January December). Notably, non-cy plans and other changes that occur mid-year will need to be reflected for the applicable month(s). This may include changes in affordability, plan changes from insured to self-insured (or vice versa) or mid-year enrollment changes in a self-insured health plan. Much of this data is reported for each month of the calendar year, with some opportunities to report on a 12-month basis. Prepare to track data and pull reports for each month of the CY. The information contained in this guide is general in nature and is subject to change as guidance develops. The information contained herein is not intended to be construed as legal advice or opinion and does not take into account any particular facts and circumstances of a specific situation. Advice of counsel or tax professionals is recommended. My Benefit Advisor 4 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

40 5 Background Beginning in 2015, large employers may be subject to an assessable payment (referred to as a penalty ) if any FTE receives a premium tax-credit or cost-sharing subsidy (collectively a subsidy or subsidies ) to purchase health insurance through the Marketplace. There are two possible penalties ( No Coverage and Offer Coverage ). The penalty that may apply will depend on the particular circumstances of the employer. For this purpose, an FTE means an employee with at least 30 hours of service per week or 130 hours of service per month as determined under the applicable measurement method (look-back or monthly). Only applicable large employers must complete the Forms 1094-C and 1095-C. Generally, this means an employer that had 50 or more FTEs (including full-time equivalent employees) on business days in the preceding calendar year. Large employer status is determined on an annual basis and requires aggregating all employees within a controlled group 3. For 2015 only, medium-sized employers (50-99 FTEs) may qualify for relief from the employer mandate, subject to certain rules 4. However, these employers are still required to comply with reporting requirements for 2015 and certify eligibility for the relief on Form 1094-C. No Coverage Penalty This penalty applies when an ALE does not offer at least 95% of FTEs and their dependent children a group health plan (i.e., MEC) and at least one FTE receives a subsidy in the Marketplace to purchase qualified health plan coverage. The penalty is $166.67/month (or $2,000/year) multiplied by the total number of FTEs 30. Offer Coverage Penalty This penalty applies when an ALE offers at least 95% of FTEs and their dependent children a group health plan (i.e., MEC) but the coverage is not affordable 5, does not provide minimum value 6, or excludes 5% or fewer FTEs and one (or more) of those FTEs receive a subsidy in the Marketplace. The penalty is the lesser of: $250/month (or $3,000 annually) multiplied by each FTE who receives a subsidy in the Marketplace to purchase health insurance coverage; or the No Coverage penalty. For 2015 only, an ALE may use 70% (as opposed to 95%) and 80 (as opposed to 30) to determine liability under the No Coverage penalty. However, this relief is not available if the employer changed a non-cy plan after February 9, 2014 to begin at a later date. Employers eligible for transition relief may use 30% (as opposed to 5%) to determine its Offer Coverage penalty exposure in The penalty amounts may be adjusted for inflation no adjustment has been announced for Penalties are assessed monthly, but paid annually. 3 For purposes of determining whether an employer is a large employer, all persons treated as a single employer under Code 414(b), (c), (m), or (o) are considered to be employed by a single employer. Consult with counsel or tax advisors on questions of common ownership or controlled group participation. 4 Medium Sized Employer Relief. Certain medium sized employers may delay the application of the employer mandate until the first plan year that begins in 2016 (e.g., January 1, 2016 for a calendar year plan). This relief is available only if the employer did not modify the plan year after February 9, 2014 to begin on a later calendar date and if the employer satisfies all of the following conditions: a. Limited Workforce Size The employer employs on average at least 50 but fewer than 100 FTEs (including full-time equivalent employees) on business days during b. Maintenance of Workforce and Aggregate Hours of Service. Between February 9, 2014 and ending on December 31, 2014, the employer does not reduce the size of its workforce or employees hours of service to satisfy the workforce size condition. c. Maintenance of Previously Offered Health Coverage The employer does not eliminate or materially reduce the health coverage, if any, it offered as of February 9, d. Certifies eligibility for relief on Form 1094-C.. 5 Coverage is affordable if the cost for self-only coverage does not exceed 9.5% of household income for the lowest cost minimum value plan. The regulations provide three safe harbors (W-2, FPL and rate of pay) that may be used to determine affordability. 6 Minimum value (MV) means a plan that covers at least 60% of the total allowed cost of benefits that are expected to be incurred by the plan. Guidance provides four ways to satisfy this threshold (MV calculator, safe harbor plan designs, actuarial certification and any metal coverage purchased in a Marketplace). My Benefit Advisor 5 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

41 6 What Information To Collect Basic Information (1094-C and 1095-C) Name, EIN, address, contact person and phone number for the employer. If part of a controlled group, name and EIN of other employer members. If health plan coverage is offered, funding status during the calendar year (insured or self-insured). Calendar year (CY) reported (e.g., 2015). Name, address, tax identification number (usually the social security number) for each FTE. Employer Information Reported on a Monthly Basis Was MEC offered to at least 95% of FTEs and children to age 26 for each month of CY? Total number of FTEs for each month of the CY. Total number of all employees (this includes all FTEs and non FTEs and employees in a limited non-assessment period 7 ) for each month of the CY transition relief eligibility: medium sized employer relief or 70%/80 relief. Full-Time Employee Information Reported on a Monthly Basis Each FTE for the CY this means any employee who is considered full-time for at least one month during the CY The health plan coverage, if any, offered to the FTE (and any family members) each month of the CY (e.g., self only, self+ family, no coverage offered) The self-only premium an employee must pay for the lowest-cost plan that provides minimum value. The reason why an employer would not be subject to a penalty for a particular month (e.g., employee in waiting period, employee in initial measurement period, affordability safe harbor applies). The months for which the employer relied on non-cy relief with respect to FTEs. If Self-Insured, Covered Employee/Individual Information Reported on a Monthly Basis Names, SSN (or tax identification number of non-employees), and months of coverage for any covered employee/individual (e.g., retiree or COBRA qualified beneficiary) and family members during the CYThe months for which the employer relied on non-cy relief with respect to FTEs. 7 A limited non-assessment period includes: an Initial Measurement Period and associated Initial Administrative Period, the first calendar month of employment if the employee is not hired on the first day of the month, the period following change in status to FT during IMP, and/or the waiting period. My Benefit Advisor 6 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

42 7 Form 1094-C Overview Form 1094-C is the summary form used to transmit all Forms 1095-C to the IRS. It provides specific employer-level data. How to Complete Form 1094-C PART I Lines 1-7. Complete the name of the large employer, the employer s tax identification number (EIN), address, and the name and phone number of a contact person responsible for answering any questions. Lines Complete these lines only if a Designated Governmental Entity (DGE) filing on behalf of an employer. Otherwise skip these lines. Non-governmental employers will always skip Lines For more information refer to the instructions. What s a DGE? DGE is a person or persons that are part of or related to the Governmental Unit 8 that is the ALE Member and that is appropriately designated for purposes of these reporting requirements. In the case of a Governmental Unit that has delegated some or all of its reporting responsibilities to a DGE with respect to some or all of its employees, one Authoritative Transmittal must still be filed for that Governmental Unit reporting aggregate employer-level data for all employees of the Governmental Unit (including those for whom the Governmental Unit has delegated its reporting responsibilities). Note, special rules apply if there is selfinsured health plan coverage and the employer delegates responsibilities to the DGE. Review the instructions. Line 17. Reserved for future use, do not complete. 8 A Governmental Unit is the government of the United States, any state or political subdivision thereof, or any Indian tribal government (as defined in section 7701(a)(40)) or subdivision of an Indian tribal government (as defined in section 7871(d)). For purposes of these instructions, references to a Governmental Unit include an Agency or Instrumentality of a Governmental Unit. Until guidance is issued that defines the term Agency or Instrumentality of a Governmental Unit for purposes of section 6056, an entity may determine whether it is an Agency or Instrumentality of a Governmental Unit based on a reasonable and good faith interpretation of existing rules relating to agency or instrumentality determinations for other federal tax purposes. My Benefit Advisor 7 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

43 8 Line 18. Enter the total number of Forms 1095-C that are submitted with this Form 1094-C. For example, if the employer generates 200 Forms 1095-C, 200 will go in Line 18. PART II Line 19. Mark this box if the Form 1094-C serves as the Authoritative Transmittal that reports aggregate employer-level data for the employer. Check this box in Line 19 if this Form 1094-C is the only Form 1094-C being filed for the employer. However, if multiple Forms 1094-C are being filed for the employer so that Forms 1095-C for all FTEs of the employer are not attached to a single Form 1094-C transmittal (because some of the Forms 1095-C are being transmitted separately), one of the Forms 1094-C associated with the employer must be designated as the Authoritative Transmittal and report aggregate data. When might an employer have multiple Forms 1094-C? A single employer may have two divisions (e.g., Washington and California) and decide instead of using a single 1094-C to transmit all of the Forms 1095-C to the IRS, the employer will file separate Forms 1094-C for each of its two divisions to transmit the Forms 1095-C for their respective FTEs in each division. In this case, one of the Forms 1094-C must be designated as the Authoritative Transmittal and report aggregate employer data for both divisions in Parts II, III and IV, as applicable. 9 Note, in the case of a controlled group (an aggregated ALE), each member of the controlled group (each ALE member) must file its own authoritative transmittal. The various employers under common control may not submit one Authoritative Transmittal. These rules also apply to DGE Likely, most employers will not have multiple Forms 1094-C. However, if an employer takes that approach, consider the following example: ABC company is a single employer (not part of controlled group). It has two divisions, Washington and California. The Washington division has 200 Forms 1095-C and the California division has 100 Forms 1095-C. Each division will submit its own 1094-C and applicable Forms 1095-C. The Washington division acts as the authoritative transmittal for the employer. Therefore: The 1094-C for the California division will reflect 100 as the number of Forms 1095-C submitted with this transmittal (Line 18). California will not check Line 19 and will not complete Lines or Part III or IV (if applicable). The 1094-C for Washington will reflect 200 as the number of Forms 1095-C submitted with this transmittal (Line 18). Washington will check Line 19 on Form 1094-C and complete Lines Line 20 will reflect 300, the total number of Forms filed on behalf of the employer (the two divisions combined). Washington will sign the 1094-C and complete Parts III and Part IV (if applicable). 10 Example. County is an ALE made up of ALE Members School District, Police District, and County General Office. School District designates the state to report on behalf of the teachers and reports for itself for its remaining FTEs. In this case, either the School District or the state must file an Authoritative Transmittal reporting aggregate employer-level data for all FTEs of the School District. My Benefit Advisor 8 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

44 9 If Line 19 is checked, complete the rest of Part II (Lines and signature) and Parts III and IV, as applicable. If Line 19 is not checked, sign the Form, but do not complete Lines or Parts III and IV. Line 20. Line 21. Line 22. Enter the total number of Forms 1095-C that will be filed by, or on behalf of, the employer. This includes all Forms 1095-C filed with respect to this transmittal, including any individuals covered by a self-insured health plan. This number should match the number reflected in Line 18, unless the employer is required to aggregate employer data as the Authoritative Transmittal for multiple Forms 1094-C. If, during any month of the CY the employer was a member of a controlled group (also referred to as an Aggregated ALE Group) check the box in Line 21. You will also need to complete Part III, column (d) and Part IV to list the other members of the controlled group. If the employer was not a member of a controlled group during the calendar year, do not check this box and do not complete Part III, column (d) and Part IV. If the employer meets the eligibility requirements and is using one of the Offer Methods, the employer must check either box A, B, or D. See appendix for further discussion. If the employer qualifies for and uses the medium-sized employer transition relief or the 70%/80 transition relief, the employer must check box C on Line 22 and complete Part III column (e). PART III Do not complete any of Part III if the 1094-C is not the authoritative transmittal My Benefit Advisor 9 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

45 10 Column (a). If an employer offers MEC to at least 95% of FTEs and their children to age 26 for the entire CY, mark the Yes box in Line 23. If such coverage was not offered for the entire CY, mark No on Line 23 to reflect all 12 months. If an offer of coverage to at least 95% of FTEs and their children was made for some, but not all, months of the CY mark either Yes or No in the appropriate check box for each month (Lines 24-35) %/80 Relief. If an employer did not offer MEC to at least 95% of FTEs and their children to age 26 but is eligible for the 70%/80 transition relief, mark Yes in column (a) for each applicable month (or for the entire CY). Use code B in column (e). Employees in a limited non-assessment period. For purposes of determining the 95% threshold (or 70% threshold for 2015) do not count employees in a limited non-assessment period. 4980H Transition Relief for Dependent Coverage. An employer may check Yes in column (a) if taking advantage of limited relief available when an offer of coverage to children was not made. For the 2014 and 2015 plan years, for an employee who was not offered dependent health coverage during the 2013 or 2014 plan years, an employer may treat, solely for purposes of section 4980H, an offer of health coverage to an FTE but not his or her dependents, as an offer of health coverage to the FTE and his or her dependents, if the employer takes steps during the 2014 or 2015 plan year (or both) to extend coverage under the plan to dependents not offered coverage during the 2013 or 2014 plan year (or both). An employer using this transition relief for a calendar year is not eligible to report using the Qualifying Offer Method (or the Qualifying Offer Transition Relief Method) for that CY (see appendix). Column (b). Enter the number of FTEs for each month. Note this must be reported on a monthly basis (Lines 24-35). Do no count any employee who is in a limited non-assessment period. Do not use a single count for a 12-month period. Column (c). Enter the total number of employees, including FTEs, non-ftes and employees in a limited non-assessment period for each calendar month. An employer may choose one of the following days to determine this count per month and must use the same day for all months of the year: The first day of each month, The last day of each month, The first day of the first payroll period that starts during each month, or The last day of the first payroll period that starts during each month provided that for each month that last day falls within the calendar month in which the payroll period starts. While unlikely, if the total number of employees was the same for every month of the entire CY, enter that number in column (c), Line 23. Otherwise reflect the count for each month in column (c), Lines Column (d). If the employer is part of a controlled group (Line 21, Part II should be checked), then reflect each month the employer was a member of the controlled group in column (d). If part of a controlled group for all 12 months of the calendar year, use the box in Line 23. The employer will also need to complete Part IV. If the employer is not a part of a controlled group, leave column (d) blank. Column (e). If the employer marked Line 22, box C, the employer must certify eligibility for the medium sized employer relief by entering code A in column (e). If the employer is eligible for the 70%/80, then use code B in column (e). My Benefit Advisor 10 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

46 11 Do not complete any of Part III if the 1094-C is not the authoritative transmittal. PART VI Do not complete any of Part IV if the 1094-C is not the authoritative transmittal Lines If part of a controlled group (aggregated ALE) list the name and EIN of other employers in the controlled group (aggregated ALE). Do not complete Part IV if the employer is not part of a controlled group (aggregated ALE). Do not complete any of Part IV if the 1094-C is not the authoritative transmittal. My Benefit Advisor 11 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

47 12 Form 1095-C Overview All ALEs must complete one Form 1095-C for each FTE. This means that each FTE who was an FTE for at least one month of the calendar year must receive a Form 1095-C with respect to the calendar year. Form 1095-C is used to report information about each FTE for purposes of the employer mandate. It is also used to determine an employee s eligibility for a premium tax credit in the Marketplace. Employers that offer self-insured health plan coverage will also use Form 1095-C to report information regarding MEC to the IRS and to covered individuals under the employer-sponsored self-insured plan. This demonstrates that a covered individual is not liable for a shared responsibility payment under the individual mandate for the months the individual (and/ or a spouse and dependants) are covered by the self-insured health plan. As described earlier, Forms 1095-C are transmitted to the IRS by the employer using Form 1094-C. In addition, the employer must provide a copy to each FTE and any covered employee/individual in a self-insured health plan. Alternative statements to issuing the Form 1095-C to the employee are permitted, subject to specific rules described in the appendix. Generally, most employers will furnish the Form 1095-C as opposed to an alternative statement. How to Complete Form 1095-C PART I Lines 1-7. Lines 1-6. Enter the name of the employee, the employee s social security number (SSN), and complete address. Lines Enter the employer s name, EIN, address, a contact person s phone number (who to call about the information reported on the form). This information should be the same as what is reported in Part I of Form 1094-C. PART I Line 14. Offer of Coverage. This line reflects the employer s offer of coverage, if any, for each month of the CY through the use of the Series 1 Codes. If the same Code applies for all 12 months, enter the applicable Code in the My Benefit Advisor 12 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

48 13 All 12 Months section. A Series 1 Code must be entered for each month of the CY (January December), even if the employee was not an FTE for one or more calendar months. Enter the Code identifying the type of health coverage actually offered by the employer to the employee, if any. A list of codes follows. Series 1 Codes - Offer of Coverage and Line 15 1A Qualifying Offer. MEC providing minimum value (MV) offered to FTE with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line ($93.18 for 2015) and at least MEC offered to spouse and dependent(s). This code may be used to report for specific months for which a Qualifying Offer was made, even if the employee did not receive a Qualifying Offer for all 12 months of the CY. Leave Line 15 blank. 1B MEC providing MV offered to employee only. 1C 1D MEC providing MV offered to employee and at least MEC offered to dependent(s) (not spouse). MEC providing MV offered to employee and at least MEC offered to spouse (not dependent(s)). Enter the amount of the lowest cost, self-only coverage in Line 15. Enter the amount of the lowest cost, self-only coverage in Line 15. Enter the amount of the lowest cost, self-only coverage in Line 15. 1E 1F 1G 1H 1I MEC providing MV offered to employee and at least MEC offered to dependent(s) and spouse. MEC NOT providing MV offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents. MEC NOT providing MV offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents. No offer of coverage (employee not offered any health coverage or employee offered coverage that is not MEC). Qualifying Offer Transition Relief Employee (and spouse or dependents) received either: (1) no offer of coverage, (2) an offer that is not a qualifying offer, or (3) a qualifying offer for less than 12 months. This is likely a commonly used Code. Enter the amount of the lowest cost, self-only coverage in Line 15. This is likely a commonly used Code. Enter the amount of the lowest cost, self-only coverage in Line 15. Applicable for part time employees enrolled in self-insured plans. Use this Code to report covered employees who are NOT full-time and/or non-employees offered coverage under the self-insured plan (e.g., retiree, COBRA qualified beneficiary) Leave Line 15 blank Employers that do not offer health insurance coverage or offer coverage that is not MEC (e.g., only a dental plan). Leave Line 15 blank. See Appendix. Leave Line 15 blank. Line 15. Affordability. Line 15 must be completed if Codes 1B, 1C, 1D or 1E are used in Line 14. Otherwise, leave blank. Enter the amount of the employee s share of the lowest cost premium for self-only, minimum value coverage. If no employee contribution is required for the lowest cost MV plan (i.e., it s 100% employer paid), enter If the employee s share is the same for all 12 months of the CY, use the all 12 Months box. The amount reflected in Line 15 may not necessarily be the amount the employee is actually paying for coverage. For example, the employer offers two health plans. The employee s share of the lowest cost premium for self-only, minimum value coverage is $100/month. This FTE elects a benefit option that is $200/month. For this FTE, the amount reflected in Line 15 is $100, even though the FTE is paying $200/month for coverage. My Benefit Advisor 13 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

49 14 Line 16. Safe Harbor. The Series 2 Codes are used to report one or more months during the calendar year where the employer may not be subject to a penalty under the employer mandate either due to the employee s actual enrollment in MEC or certain relief. For each FTE (and any covered employee/individual in a self-insured plan), the employer will need to identify any Series 2 Code that may be applicable. In some cases multiple Series 2 Codes may be applicable, and an ordering rule applies (illustrated below). If no Series 2 Codes apply for a month, leave the box blank. Series 2 Codes - Offer of Coverage and Line 16 2A Employee not employed during the month. Enter code 2A if the employee was not employed on any day of the calendar month. Do not use code 2A for a month if the individual was an employee of the employer on any day of the calendar month. Do not use code 2A for the month during which an employee terminates employment with the employer. 2B Employee not an FTE. Enter code 2B if the employee is not an FTE for the month AND did not enroll in MEC, if offered for the month. 11 Also use this code for January 2015 if the employee was offered health coverage no later than the first day of the first payroll period that begins in January 2015 and the coverage offered was affordable and provided minimum value. 2C Employee enrolled in coverage offered. Enter code 2C for any month in which the employee enrolled in health coverage offered by the employer for each day of the month, regardless of whether any other code in Code Series 2 might also apply. Code 2C trumps any other Series 2 Code that may be relevant. This is also used for any covered employee/individual in a self-insured health plan. 2D Employee in a limited non-assessment period. Enter code 2D for any month during which an employee is in a Limited Non- Assessment Period. This includes an Initial Measurement Period (IMP) and associated Initial Administrative Period, the first calendar month of employment if the employee is not hired on the first day of the month, the period following change in status from non-fte to FTE during an IMP and/or the waiting period. Do not use 2B (not an FTE). 2E Multiemployer interim rule relief. Enter code 2E for any month for which the multiemployer interim guidance applies for that employee. Do not use 2D if the employer can use Code 2E. 2F Form W-2 safe harbor. Enter code 2F if the employer used the Form W-2 safe harbor to determine affordability for this employee for the year. Do not use if employee enrolled in the coverage offered (2C). If an employer uses this safe harbor for an employee, it must be used for all months of the calendar year for which the employee is offered health coverage. Do not use if 2E can be used (multiemployer relief). 11 Use code 2B if the employee is an FTE for the month and whose offer of coverage (or coverage if the employee was enrolled) ended before the last day of the month solely because the employee terminated employment during the month (so that the offer of coverage or coverage would have continued if the employee had not terminated employment during the month). My Benefit Advisor 14 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244

50 15 2G FPL Safe Harbor. Enter code 2G if the employer used the FPL safe harbor to determine affordability for this employee for any month of the CY. Do not use if employee enrolled in the coverage offered (2C). Do not use if 2E can be used (multiemployer relief). 2H Rate of pay safe harbor. Enter code 2H if the employer used the rate of pay safe harbor to determine affordability for this employee for any month of the CY. Do not use if employee enrolled in the coverage offered (2C). Do not use if 2E can be used (multiemployer relief). 2I Non-calendar year transition relief applies to this employee. Applies only for non-calendar year plans that qualify for this relief. Applies only with respect to the months during the CY prior to the start of the plan year (e.g., June 1 plan year, 2I may be used to report relief for January May). PART III Complete Part III ONLY if the employer offers a self-insured group health plan in which the employee or other individual is enrolled. If the employer completes Part III it must indicate self-insured coverage by checking the box at the top of the section. Employers sponsoring an insured arrangement will leave this section blank as the carrier is responsible. This part must be completed by an employer offering self-insured health plan coverage for any individual who was an employee for one (or more) calendar month(s) of the year and who enrolled in the coverage regardless of full-time status. In addition, if non-employees are covered by the self-insured plan, an employer may use Form 1095-C (as opposed to Forms 1094-B and 1095-B) to report MEC for these individuals. This may include certain retirees or COBRA qualified beneficiaries or non-employee members of the board of directors who have coverage under the self-insured health plan. 12 Note, the employer must still complete Parts I and II with respect to these individuals. Use Code 1G in Line 14 to reflect the offer of coverage for a non-employee or a part-time employee. 12 If self-insured coverage is offered to these non-employees, there are additional compliance considerations that should be reviewed, including potential MEWA and tax implications of offering coverage to non-employee board of director members, potential for uncovered claims if not appropriately contracted for in the stop loss agreement, assurance that the plan terms permit such coverage and potential for 105(h) discrimination violations in the event that such coverage is extended only to former highly compensated employees. My Benefit Advisor 15 This summary is intended to convey general information and is not an exhaustive analysis. This information is subject to change as guidance develops. My Benefit Advisor does not provide legal or tax advice. For advice specific to your situation, please consult an attorney or other professional My Benefit Advisor. All Rights Reserved. CA Insurance License #0G33244